It will be an important week for Japan as the first estimates of first quarter GDP growth are published on Wednesday. Gross domestic product was seen to have expanded at an annualised rate of 0.2% in January-March, according to a Reuters poll of 19 analysts, after a 1.1% contraction in October-December. That would translate into a quarterly expansion of 0.1%, the poll showed, following a 0.3% decline in the final quarter last year.
A negative outturn would push the economy back into technical recession, which is defined as two consecutive quarters of negative growth. A stagnant consumer spending and wobbly financial markets keep expectations for more government stimulus measures alive. A weaker reading would for sure fuel expectations that the Bank of Japan may ease monetary policy by July, which would likely send the yen lower in the currency markets.
"The GDP data will probably show the actual economy lacks strength. There are signs of a pickup in exports and corporations keeping firm capital spending plans, which support the economy, while private spending stays at a standstill." said Takumi Tsunoda, senior economist at Shinkin Central Bank.


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